The US Treasury has issued a license to Chevron to expand its oil extraction in Venezuela. This license will be valid for 6 months and then it will need to be extended. This decision comes after bilateral talks between the Venezuelan regime and the local opposition, which managed to reach a compromise on several issues.
In 2018, elections were held in Venezuela, in which the current president, Nicholas Maduro, officially won. This result was contested by the opposition based on accusations of electoral fraud. Venezuela’s parliament declared Juan Guaidó the president, and mass protests broke out in the country. Maduro’s government cracked down violently against the protesters. In response, the US imposed harsh sanctions on oil exports from Venezuela. Oil used to be Venezuela’s main export, and the oil embargo caused the South American country’s economy to collapse. The result is a humanitarian crisis that has caused millions of Venezuelans to flee abroad.
The resumption of talks between the Venezuelan government and the local opposition took place after more than a year. The two sides met in Mexico City on November 26, 2022, and reached an agreement regarding the foreign finances of the Venezuelan government. Approximately $3 billion that the Venezuelan government had stored in foreign banks was frozen by the US as part of the sanctions imposed on Caracas in 2019. Based on the agreement reached, this money will be transferred to the UN, which will use these funds to deliver humanitarian aid to Venezuela.
The release of US sanctions in the form of a license for Chevron was announced on the same day by the US Treasury. Is this relaxation a reaction to Maduro’s concessions on human rights, or is it purely US interests? The truth is that the issuance of the license is a major victory for the Maduro regime. The license opens the door for Venezuela’s reintegration into the global energy market, which could help stabilize and save the local regime.
At the same time, the US economy would be greatly relieved if Venezuela resumed at least a part of its oil exports. The year 2022 was marked by the Russian invasion of Ukraine, which, among other things, catapulted oil prices to almost unprecedented levels. This increase in prices has greatly damaged the world economy by contributing to inflation. In the USA, the negative economic development was also reflected in the results of the midterm elections. The Democratic Party – Incumbent president Joe Biden’s party lost control of the House of Representatives and nearly lost control of the Senate. The American president currently needs to take steps that will solve the global energy crisis as quickly as possible and increase his approval among citizens. It currently hovers around 40%.
The only party that lost in the negotiations was the Venezuelan opposition, which did not get any enforceable promises regarding the upcoming Venezuelan elections in 2024. The US is in a position where it needs to slowly open the door to the Venezuelan regime, but not at the cost of abandoning its ally. Therefore, it is willing to loosen sanctions only if Maduro’s regime adopts at least superficial reforms.
The situation can develop in different directions. What will most likely happen is that the Venezuelan opposition and Caracas will continue to negotiate, with Maduro’s government making cosmetic concessions without fundamentally weakening its power position. This will allow the US to continue easing sanctions against Venezuela and thereby improve its economic situation. However, an outcome where the talks collapse and the US imposes even stricter sanctions on Venezuela, similar to the case of Iran, is also possible.
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